Opinion: Fit and proper but just what does it mean?
Are online gaming operators eligible for a Nevada licence if they accepted US players post-UIGEA? It's just one issue yet to be clarified by regulators, and the answer is murky at best, says Anthony Cabot.
I was reflecting recently on a frequently recurring question that comes up at egaming conferences. The question is: are internet operators that have directly or indirectly accepted US players, through their licensee, ineligible for a Nevada licence?
The answer is that we won’t know until Nevada regulators actually face this issue in a hearing. We do know, however, that it will be an issue. No precedent exists as to whether or not this is a disqualifying factor to obtain a licence in the Silver State. Nevada’s laws and regulations do not have rigid standards for determining suitability. For example, conviction of a felony is not necessarily a disqualifying factor as it is in some states. Instead, gaming regulators make a qualitative decision about a person or company’s suitability based on all sorts of factors.
Typically, regulators look into matters such as associations with organised crime, honesty and integrity, and adequate business experience. Compliance Compliance is an important aspect of that review. Compliance is much more than whether the company has violated the law, but whether it has institutional controls for assuring compliance with all laws. This means compliance with United States and Nevada law, as well as with foreign laws.
There’s been much discussion about 16 October 2006 “ the date the Unlawful Internet Gaming Enforcement Act (UIGEA) came into effect “ and whether that should be a determining date. The thought goes that after that date, site operators knew that accepting US play was unlawful. The recent California legislation proposed a December date, indicating that some amnesty should have extended beyond the October 16 date.
This approach is overly simplistic. For example, even if we assume that UIGEA was the first federal statute that clearly marked that accepting US play on poker or games of chance might be illegal, it may be less relevant to companies that accepted sports wagers. In 2002, co-founder and CEO of World Sports Exchange Jay Cohen’s conviction for accepting US play on sports wagering was upheld. His conviction prompts the question: is 2002 perhaps a better date for those that accepted sports wagers?
In addition, these foreign operators should become familiar with gambling law NRS 465.092 that prohibits a person who is not licensed in Nevada from accepting or receiving a wager over the internet from a person located in Nevada. This law has been in place since 1997.
Moreover, determining one’s suitability for a Nevada licence is not likely to be limited to compliance with gaming laws. Focus may shift to compliance with US and state tax reporting and payment regulations. Finally, compliance with Nevada or even US law is not the sole focus of any licensing inquiry.
Ultimately, this might evolve into an inquiry into compliance with the laws of foreign countries; specifically regulators may scrutinise a company’s efforts to review and comply with the laws of all jurisdictions where it accepts wagers. Let’s hope that Nevada regulators provide a clear answer to this question “ and soon.